Settlement
The Float Tax: What 30-to-60-Day Settlement Actually Costs Your Business
By Richard Rowe, Founder & CEO, Everpay · · 6 min read
The short answer
Slow settlement costs you your borrowing rate applied to every dollar in transit. A business carrying $2M in average receivables on 45-day terms at a 12% credit line pays roughly $240,000 a year to wait for money it has already earned. That cost never appears on an invoice, which is why most operators have never priced it.
Every cross-border business knows the wait. The cargo lands, the buyer pays, and the money spends weeks in transit between their account and yours. The wait feels like weather, something you plan around because you cannot change it.
The wait has a price, and once you calculate it, it stops looking like weather and starts looking like a line item. This article shows you where the float hides, how to price yours and what changes when the rails get faster.
Where the float lives
The float is every dollar that has left your buyer and not yet reached you. It hides in three places, and most businesses sit in at least two of them.
| Settlement rail | Typical time to cash | Who holds your money |
|---|---|---|
| Letter of credit | 30 to 60 days | Issuing and confirming banks |
| Correspondent bank wire | 2 to 10 days | Each intermediary bank on the route |
| Card processing with reserve holds | Rolling reserves held 90 to 180 days | Your processor |
| Stablecoin settlement | Under an hour | Nobody |
Letters of credit were built for a world where documents traveled by ship. Correspondent banking routes payments through intermediaries that each hold funds and take a spread. And high-risk merchants face a third version: processors that approve the business but protect themselves with rolling reserves, so a portion of every month's revenue sits untouchable for a quarter or more.
Pricing your own float
The math takes three numbers you already have.
- Average balance in transit: $2,000,000
- Your borrowing rate (credit line, factoring or invoice finance): 12%
- Days you actually wait: 45
If you do not borrow to cover the gap, the cost shows up somewhere else: inventory you could not buy, a deal you could not take, a discount you gave for faster payment. The float tax gets paid either way. Borrowing just makes it visible.
The 45-day invoice that settled in 47 minutes
A freight forwarder we work with invoices buyers across three continents on letter of credit terms. Standard wait: 45 days from cargo landing to cash in account, with a credit line covering operations in between.
We moved the settlement to stablecoin rails. Same buyer, same invoice size. Funds confirmed and converted in 47 minutes. The credit line balance started falling the same month, and the interest saved went straight to margin, because the revenue never changed. Only the waiting did.
What faster rails require
Stablecoin settlement is not a product you switch on. It requires banking relationships on both ends, liquidity in the corridors you trade in, KYC that satisfies the institutions involved, and conversion into the currency you actually operate in. That infrastructure is the work. It is also why the businesses that have it settle in minutes while their competitors wait on the standard.
Everpay has spent a decade building it: bank partnerships, exchange relationships and compliance infrastructure across the corridors mainstream processors avoid. See our compliance and trust center and enterprise payment infrastructure.
Related reading
- How to accept payments internationally
- How merchant payment processing works
- What to do when your payment processor drops you
Frequently asked questions
Price your float in one conversation.
Twenty minutes with our team, your last five settlements, and a real number for what the waiting costs you.
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